Facing Climate the Chilean Way

05/07/2015 04:05 pm ET
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Updated
May 07, 2016

Marcelo Mena
PhD, Vice-Minister of the Environment, Government of Chile

This past March Chile reeled from simultaneous natural disasters. Forest fires raged in the South, impacting air quality and visibility, shutting down highway traffic. In late March unusual rains hit the Atacama Desert, unleashing landslides and flooding that left thousands without a home, destroying sewer systems and leaving many cities covered in sludge. In Santiago, heat waves shattered our temperature records, all in the midst severe drought conditions. All of these risks are a constant reminder that climate change is a threat to the economies and the wellbeing of vulnerable and developing countries such as Chile. And we must act on both the mitigation and adaptation to climate change. The country supports such action as our most recent survey estimates that 86% of Chileans think climate change is impacting their daily lives, and it is due to anthropogenic emissions.

Last year the New Climate Economy Report stated that facing climate change costs the same as not facing climate change. Chile has recently finished a consultation process on its intended national determined contribution (INDC). Our conclusion in a three-year process, which included coupling emissions and econometric models, is that facing climate change for Chile is actually cheaper and creates more economic and job growth tan the status quo. It should come as no surprise, as we are not producers of fossil fuels, and whatever we do to reduce our dependence is better for the bottom line. This contribution will be commitment between 35 and 45% reduction of our emissions intensity by 2030. Indeed, we view climate changes as a threat to our economy, as we've analysed the impact of climate change on sectors such as agriculture, mining, power generation, infrastructure, and the health sectors. While we only account for 0.3% of global emissions, we need a binding agreement on emissions reductions, as we are vulnerable to inaction. Also, our per capita emissions are growing steadily, albeit there are much smaller than developed countries (roughly 5 times smaller). We must take a low carbon emissions growth strategy that will improve the air quality in our cities, make us more energy independent, and overall make our economy more efficient and competitive. Finally we believe if we are going to contribute to reaching a global agreement on climate, we must lead by example.

Our actions have been clear. In 2014 we approved two carbon taxes in the context of our tax reform. One of these is a tax on new vehicles as a function of their CO2 and NOx emissions (which will hit diesel SUV's mostly), and a tax on the estimated environmental externalities of power generation, in terms of health effects of particulate, NOx, and Sox pollution, alongside with carbon pollution. This latter tax will mostly collect from coal power generation. The Ministry of Energy has reformed our power auctions allowing more competition and unleashing strong renewable energy investments. In fact from 2014 to 2030 more than 70% of new installed capacity in Chile will be non-conventional renewable energy. Our latest power auction showed that unsubsidised concentrated solar can beat fossil fuel energy in a market that reflects externalities. We are convinced that green growth is possible, and that government can develop market instruments such as a carbon tax to prevent distortions. We believe we can face climate change not sacrificing our growth, but actually making our communities more sustainable. We believe in the end, that we can face climate change, the Chilean Way....